SAN MATEO MUNICIPAL COLLEGE Equipment (net) 500,000 Retained Earnings 1,200,000

NAME:_________________________________________ Total ₱2,025,000 Total Equities ₱2,025,000

YEAR/SEC:___________ SCORE: __________________ On the date of 2nd purchase, independent appraisers determine that the fair
value of Mercury Company’s equipment fair value higher than its carrying
1. Green Corporation acquired on July 1, 2018, 90% of the Blue Company
when the fair value of Blue Company net assets was ₱120M and their carrying amount by ₱250,000 with 5 years remaining life. All other assets approximate
amount was ₱135M. The consideration transferred comprised of ₱180M in their fair values. Any excess is attributable to goodwill.
What is the fair value of the 10% previously held interest on the date of the 2nd
cash transferred at the acquisition date, plus another ₱50M in cash to be acquisition? _______________________
transferred 10 months after the acquisition date if a specified profit target 4. Refer to the previous question, what is the fair value of 20% NCI on January
was met by Blue Company. At the acquisition date, there was only low 2, 2018? ________________________
probability of the profit target being met, so the fair value of the additional
consideration was ₱5M. Green Corporation opted to measure the NCI 5. Balance sheet of Alpha Inc. and Beta Co. prior to business combination is
proportionately. At the end of the year, impairment loss on goodwill given as follows:
amounting to ₱100,000 is to be recognized. The amount of goodwill in the
Alpha Inc. Beta Co.
consolidated statement on December 31, 2018 amounted to CV FMV CV FMV
_________________ Assets:
Cash 250,000 150,000
2. On January 1, 2018, X Company acquired a 49% interest in Y Company for Accts Receivable-net 400,000 300,000 320,000 280,000
₱60M. X Company already held 20% interest which had been acquired for
Inventories 575,000 475,000 375,000 300,000
₱20M a year ago but which was valued at ₱24M at January 1, 2018. The
Plant Assets 500,000 400,000 600,000 450,000
book value of identifiable net assets of Y Company on this date was ₱115M.
Other Assets 175,000 100,000 55,000 40,000
The price difference is allotted to property plant and equipment with 10 years
Total Assets 1,900,000 1,500,000
remaining life as of date of acquisition. X Company opted to measure NCI at
fair value. What amount of goodwill or gain on bargain purchase is
Current Liabilities 200,000 200,000 150,000 150,000
recognized on the consolidated balance sheet at the date of acquisition?
_____________________ Long term liabilities 500,000 500,000 450,000 450,000
Capital stock, P100 par 700,000 600,000
3. Abbot Laboratories purchased a 10% in Mercury Company a year ago as Share Premium 100,000 200,000
an available for sale for ₱200,000. On January 2, 2018, Abbot Laboratories Retained Earnings 400,000 100,000
purchased 17,500 additional shares of Mercury Company from existing Total Liabilities 1,900,000 1,500,000
stockholders for ₱1,575,000. The 2nd purchased raised Abbot Laboratories’ The stockholders of Alpha, Inc. and Beta Co. agreed to combine whereby
Delta Company is organized to take over the assets and assume the liabilities
interest to 80%. Mercury Company’s statement of financial position prior to of the two companies. The stock of Delta Co. has no par value but with a
the 2nd purchase follows: stated value of P30 and are to be issued in exchange for the stocks of the
two companies on a five for one basis. The goodwill resulting from the
Assets Liabilities & Equity business combination is ________________________
Current Assets ₱825.000 Liabilities ₱325,000
Land & Bldg (net) 700,000 Ordinary share, ₱20 par 500,000 6. The total assets immediately after the business combination is ___________
7. What do you call this legal form of business combination? _______________ B. Prepare Parrot's general journal entry for the acquisition of Sparrow,
assuming that Sparrow will dissolve as a separate legal entity.
8. On January 31, 2018, Pine Inc. issued 100,000 shares of its P100 par value
ordinary shares for the net assets of Tree Inc. The market value of Pine’s
ordinary shares on January 31 was P116 per share. Pine paid a fee of P80,000
to the consultant who arranged this acquisition. Costs of registering and
issuing the equity securities amounted to P40,000. No goodwill was involved in
the purchase. The business combination is between two SMEs. The amount to
be capitalized as the cost of acquiring Tree’s net assets: __________________

9. Refer to the item above, the amount charged to business combination

expenses is _________________

Requirement:
A. Prepare Parrot's general journal entry for the acquisition of Sparrow,
assuming that Sparrow survives as a separate legal entity.